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That thud you hear could be eBay's (Nasdaq: EBAY) fundamentals finally hitting bottom.

A pair of brokerage reports are waxing optimistically on the online marketplace giant. Analysts at Jefferies & Co. and Collins Stewart believe that the company's struggling auction platform is finally turning the corner, even if the namesake site may not return to its former glory right away.

This is huge news. eBay's auction business has been the parent company's sandbag, albatross, or anchor (depending on where you rest your hat when it comes to metaphors). Getting its marketplace division pointing in the right direction would lessen the load on the dot-com giant's better-performing subsidiaries to make eBay a growth stock again.

Remember eBay's last quarter? PayPal and Skype delivered 7% and 21% gains on the top line, respectively. Unfortunately, an 18% year-over-year revenue plunge in eBay's marketplace business was enough to find revenue and earnings clocking in lower than they did a year ago.

Stability -- even if it's simply sequential stability -- would be an encouraging achievement. As MercadoLibre (Nasdaq: MELI) continues to prove through Latin America, there is still growth to be had in running a successful online marketplace.

There's clearly nothing wrong with PayPal. It remains the online transaction enabler of choice for more than 73 million active registered users. It will never be Visa (NYSE: V) or MasterCard (NYSE: MA) , but it doesn't have to be. It can carve out a cozy living swapping funds, virtually.

Skype is the small speedster, but eBay is already committed to unloading the popular voice-chat platform. Whether it gets spun out to shareholders or sold to a hungry bidder, it's leaving the roost. And don't underestimate the demand: Just because eBay never found a way for the puzzle piece to fit, that doesn't mean a fading teclo wouldn't love to get its hands on Skype. Even Google (Nasdaq: GOOG) would be a sweet fit, as a way to scale its nascent Google Voice service in a hurry.

It's true that eBay's stock has raced ahead of its fundamentals lately. The stock has soared 66% since bottoming out in March, even as analysts see it posting lower profitability when it steps up to the quarterly earnings stage in two weeks. However, the stock was trading much higher a few years ago, when eBay and PayPal were a lot smaller.

What if these two analysts are right? What if eBay is about to surprise us by breathing new life into its meandering auction website? The stock's rally over the past four months has been impressive, but that rally would be only the beginning if eBay bounces back as a growth-stock story that Mr. Market figured wouldn't have a happy ending.

Longtime Fool contributor Rick Munarriz is a satisfied eBay user, with 177 positive feedbacks to show for it. He owns no shares in any of the companies in this story and is also a member of theRule Breakersanalytical team, seeking out the next great growth stock early in its defiance.The Fool has a disclosure policy.

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All of this is well and good - but the flip side is that Ebay now has thousands (100's of thousands?) of past members that have been disaffected and who no longer have any interest in coming back. (Despite a few halting efforts on Ebay's part to win them back)

Much of Ebay's growth was based on a community of happy users, sending out great word of mouth. Now this is no longer the case - with many past users considering the site to be irrelevant to their needs anymore. As much as people loved the site in 1999 - they might scorn it today, after Ebay's well publicized missteps with their community of users.

Many people will look at the charts and the balances and wonder why Ebay has remained with an anchor around it's neck - A major change in the fickle base of users is likely one contributing factor - and their bad "word of mouth" will be hard to overcome.

I'm one of those who no longer has any use for ebay. I am also of of those who encourages people to look in different directions when thinking of buying or selling online. That said, I used to be their (ebay's) biggest supporter, now I truly can't find any reason to send anyone in that direction.

I wonder how low they'll go before they admit they alienated their "core" sellers? My guess is right to the bottom, and they will never.admit to the real reasons they are struggling. What is so obvious to the rest of the world has somehow is eluded the incredibly stubborn ebay boardroom.

Ebay must not have had Quality Management training. Or they were asleep on the day that Identifying Your Customer was discussed and exercized. Ebay's true customer is its sellers. The sellers are who pay ebay for the priviledge of selling there... Too Bad.

Ebay does not allow a true exchange of feedback or customer experience to happen... Buyers can and do attempt extortion... All with ebay's complete blessing.

But if this is what the stockholders want.. Please let me know what other what other businesses you are invested in so I can change my buying habits and not support you!

if ebay can buy any company it wants... good, go for it... why not buy some REAL customer service while you are at it instead of this band aid that passes as customer.

nutspec just about said it all. A few analysts who only write what Ebay reports have it completely wrong (as usual). If they think they have their finger on the pulse of Ebay....guess what?...they DON'T. Ebay has so alienated the very sellers who built the business that it will be almost impossible to turn the ship around. With the few pitiful crumbs Ebay has tossed the sellers it will only be tossed right back in their faces. Less and less of them need Ebay anymore and less and less of them are actually bothering to list on Ebay even with their pitiful five free listings per month! Through their own actions Ebay has become the most hated company on the internet and sellers will continue to make "noise" until there is absolutely NO doubt as to the treatment they received, and continue to receive, from John Donahoe and his crew. John, we've taken our "flea market" elsewhere and we're building again. We realize it will take time but NEVER AGAIN will a company cast us aside or treat us the way Ebay did! Investors take note - listen to the sellers - they have NOT been wrong so far - Ebay is dying a slow painful death and unless management is changed and new management (experienced in online selling) comes in and treats the sellers like the customers they are - then Ebay will DIE!

Doesn't matter what they show on their balance sheet. Ebay's core is steadily declining. In other words - they aren't making SALES and that's their life's blood! They are trying to keep up appearances by imposing 21 to 180 day holds on seller funds - by using rolling reserves on its larger sellers - by selling ads that clutter the site and take buyers off-site and in numerous other ways. Even the five "free" listings per month they bestowed on sellers is really two-edged. If you sell something under $25.00 you'll save 35 cents - if you sell something over $25.00 you'll actually pay more in final value fees....and you cannot opt out of this "gift" - the five "freebees" are MANDATORY! There are numerous ways Ebay plays dirty pool with their sellers. Manipulating seller exposure, giving ts diamond sellers free or low cost listings and forcing the small sellers to pay more! This cannot go on - sellers are telling them that by LEAVING! That same 3 billion dollars they've been sitting on for awhile now isn't going to cover it all and make them look successful when they're not. Yes, Paypal is successful and Skype is successful but the very core of Ebay - its auctions and sales are floundering! That's what I mean by Ebay is dying!

I have been a regular eBay user since 1998. Mostly I buy, but I have also sold numerous items using the auction format. Right now, eBay is an enigma because they have angered so many long-time buyers and sellers, yet the volume of 'product' offered continues to grow (at least in the niche areas I am particularly interested in).

To me this implies that eBay management is mostly irrelevant. There are apparently an endless stream of eBay wannabes coming on board to replace those who are dissatified. It also suggests that a well-run online auction business that caters to small/medium size sellers (and buyers) should be able to suck the life out of eBay. Yet nothing out there is yet even remotely competative. Commenters here continue to mention other sites, but (compared to eBay) these venues have NOTHING to offer -- no customer base and no collectible merchandise.

It is interesting to speculate about what happens next. Most likely eBay's huge growth days are in the past. But it will be no easy task to beat them at their own game. There are only so many people on the planet who are interested in online auctions. If 90 percent of them now use eBay (regardless of bad treatment) or simply stop buying via this type venue, there is nothing of significance left for even the best-managed, user-friendly 'newbie' auction site to harvest.

'Critical mass' may literally be impossible for an eBay competitor to achieve, at least for the immediate and forseeable future. Yet history is littered with the bodies of 'invincible' corporate titans whose customer base moved on without them.

I hate to keep coming back, but you're misinformed. Sellers are making headway on other sites. The truth is they can hang out on other sites and hope for sales - or they can put up with Ebay and get very little exposure and minimal sales these days. They are opting to stick with the other sites. For example I am selling selling about 75 percent of my items on Overstock - as opposed to merely 10 percent of them on Ebay. Selling on Overstock is cheaper and relatively stress free - somewhat like Ebay used to be. Ebay is reaching a point...with small sellers like myself...where they are no longer of any real significance and the trouble they cause me isn't worth that occasional sale. They're seeing it now but are too arrogant to come down to our level and apologize for what they've done! Two years ago I wouldn't dream of going elsewhere but they destroyed that playing field and made it almost impossible for me and thousands of others like me to get the needed exposure in order to make sales. I think as the economy starts an upward climb again you will see the real damage Ebay has done to itself. It won't grow but some of the other sites will. My opinion based on 11 years of constant selling on Ebay.

Ebay grew revenues by 12% last year and produced $2.3 billion in free cash flow, the most it has ever generated. This might not be the robustly growing business it once was, but I think it is more than a bit premature to be writing its obituary. At the end of the day the life blood of any business is its abililty to produce cash and Ebay is still doing that in spades.

Ebay "itself" is growing?. That is a complete fallacy. Paypal is carrying ebay. Ebay's stock is also trending down again as nervous stockholders await their upcoming earnings. I believe the smoke and mirrors will eventually be exposed.

As to the health of ebay, don't believe people who own their stock. They have vested interest and are therefore biased.

Here are a few interesting facts:

As always, statistics have been used to create false truths and half-truths. So, you get a stock that was 40.73 (2 short years ago) and then drop it to 9.91 in less than 2 years. Then the stock recovers to a paltry $17.00 and people are calling John Donahoe a success (currently $15.99)! Now that is funny. Lets look at the stats another way and see that they have devalued more than 150% since John Donahoe took over (and that is at the current value). Pat that guy on the back will you. You have to laugh at experts who know nothing of what they speak. They try to influence people into believing rubbish. Buy some rubbish now, it's all over ebay...and it's cheap too!

Ebay is floundering...sellers are not happy (an understatement)...sellers are not making money (no profit--you close shop). These are the real facts which are being muddied by those in the know who don't want you to know.

Don't kid yourself, ebay will fall if it continues down this path. A business is only viable when it makes profits...but not when it is completely off the backs of it's employees. The sellers must be making a profit as well or they have no choice but to leave. There is little room to make profit on ebay anymore (barring a few niche markets). Once people realize they are working for pennies per hour they will move on. Ebay's profits will subsequently plunge along with the exodus. Not rocket science...but then again, even rockets crash to the ground from time-to-time.

"Ebay grew revenues by 12% last year and produced $2.3 billion in free cash flow, the most it has ever generated. This might not be the robustly growing business it once was, but I think it is more than a bit premature to be writing its obituary. At the end of the day the life blood of any business is its abililty to produce cash and Ebay is still doing that in spades."

Take Paypal out of the blanket "ebay" and substitute "Ebay core site".

Sending report...

Rick has been writing for Motley Fool since 1995 where he's a Consumer and Tech Stocks Specialist. Yes, that's a long time. He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception. He earned his BBA and MBA from the University of Miami, and he now lives a block from his alma mater.
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